European Dairy Market Summary

MADISON - Jul 3/08 - SNS -- Dairy market conditions in western and eastern Europe were reviewed in the latest report on the sector released by the USDA today.

WESTERN AND EASTERN EUROPE

WESTERN OVERVIEW:  Milk production in Europe continues to trend lower
as summer temperatures and spotty moisture impact pasture growth and
milk output.  Typically during the summer months, fat content on the
incoming milk is dropping and this year is no different.  In Germany,
following the recent milk strike by farmers, pay prices to farmers
have generally increased 10 Euro cents per liter.  Most farmers state
that this is a start, but additional increases are needed.  The
increase in the pay price is not what German producers were seeking,
thus additional consideration is being discussed as to how to make
this happen.  As milk volumes decrease seasonally, thus is
manufacturing.  At this point, when possible, milk continues to clear
to cheese production with butter and milk powder production lighter
than anticipated.  Although butter and milk powder manufacturing is
lighter, traders and handlers state that product is available for
buyer interest.  At this time, international sales activity is quiet.
Discussions by various traders and handlers are centered around the
recent Japanese emergency butter tender.  Handlers and traders state
that some butter may be available out of Europe.  Butter production
continues to trend lower, although stocks continue to clear to PSA.
As of June 22, nearly 114,000 metric tons of butter has cleared to the
program since March 1.  This current offering compares to nearly
84,000 MT last year and a like amount in 2006.

EASTERN OVERVIEW:  Milk production in Eastern Europe continues to edge
lower.  Seasonally hot temperatures have not yet arrived in this
region, thus the downturn in milk output continues to slowly decline.
Traders and handler report that Eastern European stocks are available
for immediate and near term needs with prices often lower than their
Western counterparts.

0930C  steve Schneeberger  (608)250-3204

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STAT News Service